Portfolio.com is reporting today on an escalating probe into account irregularities at Fast Search & Transfer, which Microsoft acquired for $1.2 billion.

Update, 4:55 p.m.: Microsoft is taking the matter seriously. See a statement added after the jump.

"Norway's financial supervisory authority, Kredittilsynet, said its review of Fast Search's previously disclosed accounting problems not only appeared to have violated accounting standards, they may have broken the law too," reports Portfolio.

The story continued:

"It referred Fast Search to investigators at Okokrim, the Norwegian National Authority for Investigation and Prosecution of Economic and Environmental Crime.

"Okokrim last week concurred that the nature of the irregularities and the amount by which Fast Search apparently inflated its accounts were serious matters warranting prosecution. But the agency said it was too busy to open a criminal investigation.

"Rather than let the matter rest, the market supervisor turned it over to the Oslo police for investigation. Aftenposten, a Norwegian newspaper, characterized Kredittilsynet's decision to involve the police as an unprecedented step in that country."

For more detail on what Microsoft hoped to gain by acquiring Fast Search & Transfer, a player in the enterprise search space, check out this story.

Microsoft's statement, added 4:55 p.m.:

Microsoft takes any matter of this nature very seriously, and we are fully committed to taking all appropriate actions to ensure consistency with the company's core values. Through publicly available information, we were aware of the review of FAST's historical accounting practices and their efforts to implement improved financial controls. Since completing our tender offer, we have taken several steps to align these efforts to Microsoft's high standards for financial reporting and controls. We remain absolutely confident in our decision to acquire FAST for its talent, technology and valued customer relationships.